Chinese capitalism is just another knockoff

By Ian Bremmer
March 21, 2012

Is China’s system of capitalism better than that of the United States? That depends — do pigs fly? While I have no question in my mind that the U.S. is still the paragon of success when it comes to the capitalist system, lately a strange coalition of think-tankers, investors and politicians have been advancing the idea that China is eating our lunch when it comes to deploying capitalism.

More specifically, this bunch claims that China’s unique brand of centrally planned capitalism is working better than the U.S.’s overregulated, bloated, inefficient and slow-growing economy. They say that our capitalism has been so bogged down by our developed-nation cost structure that we’ll never again be a competitive center of investment for the great global pools of money in search of a safe investment out of which to make a parking spot.

Baloney.

China has indeed grown by leaps and bounds over the past decade. That’s a huge credit to a country that has modernized and industrialized on a previously unseen scale. And because of its 1.3 billion citizens, China has quite a bit of growth (read: catching up) still to come. China’s style of governance leaves the country light on regulation. However, it’s also light on rule of law, transparency, freedom of speech and several other key features that make the U.S. economy go ’round. Just because the Chinese government can move a village and build a road without holding a single hearing doesn’t mean the free market has taken hold. Indeed, it shows the opposite: China’s economy is largely state-planned, state-owned and state-run. The government uses capitalism only as a tool to reach its ends, not as a true expression of a free market.

Worse, where the Chinese government compromises the free market, it does so to fulfill its own desires of effective control over the entire country. It’s capitalism of the state, by the state and for the state, where the state is the principal economic actor. That’s in marked contrast to where the U.S. compromises on “pure” capitalism, adding things like the social safety net, worker safety, product safety, health insurance and retirement planning.

While China has a lot more growth to go, there’s another problem with its unique system of capitalism: Its outputs are far more volatile, and far less predictable, than our own. Consider where the Chinese central bank chooses to park its own money — in U.S. Treasuries, perhaps the safest investment that can be made in large enough quantities. If the Chinese could find a better place for their cash reserves, they would surely try it, but they really can’t. And if other Asian countries thought China had it all figured out, why would they all — even the reclusive Myanmar — have warmly welcomed the U.S.’s recently announced plans to solidify its presence in the Asian sphere?

A recent study showed that over 50 percent of Chinese millionaires prefer to live in the United States. Now, let’s assume these millionaires are rational actors: Their desire for a stable living situation, improved economic opportunity and access to capital not controlled by the government brought them here. These are the lucky few who have profited most from China’s economic boom. So if they’re smart, they choose to live in the U.S., giving us a clear sign our country’s system is better. If they’re not that smart, then China’s most successful choose to live in the U.S., and we should question by what form of corruption or perverse reward system they managed to do so well in China!

One of the major problems China has had with its economic model is that at nearly any time, the majority owner of most of its economy — the state — can jump into an enterprise and distort it for its own purposes. It can cook the books, it can pull out profits, it can hide losses, it can launder money and it can even shut down a company altogether. While China does have tech companies that mimic the features of Google, Facebook and Twitter, note that those Western companies haven’t been able to operate in China. What China wants is not an environment where tech revolutionaries can flourish; it wants Chinese, state-run versions of these startups, which means it will never foster the entrepreneurial spirit that makes companies like these possible.

That desire — that seemingly irrepressible urge of the Chinese to copycat everything foreign, from cars to watches to iPhones to social networks, is ultimately why no matter how good the Chinese get at tweaking state capitalism, it will never match up to the promise of a truly free capitalist economy.

Here in the U.S., we don’t know what the next huge industry will be, and that’s great. Silicon Valley could invent another new gadget. Oil sands or fracking could benefit from more extraction breakthroughs. Electric cars or solar panels could jump an order of magnitude in a generation. One of our philanthropic billionaires — Bill Gates, say — could invest in some promising new technology tomorrow. Some other completely unknown idea could erupt from a university or government lab. But whatever the manifestation, our economy holds the promise of such discoveries. Those ideas are where real new pools of capital are created and how a country becomes wealthy. Cranking out iPhones might employ more people, but it’s not the foundation for a new kind of industry or economy we’ll need in the 21st century.

In short, it’s become fashionable to look at the rough stretch of the past few years and wonder if the industriousness and resilience of the American economy is at an end. But look around the world. While one could make a viable argument that some are doing capitalism better than us (look at our neighbors to the north), a state capitalist country like China doesn’t compare. Sure, we’re at a crossroads — but that’s a lot different from being at the end of the road.

America does creative destruction — that mystical economic force of continuous reinvention — as good as any country in the world. Our game-changing innovations go on to change the entire world, again and again. What China has found is that it can shoehorn a crude version of a beautiful financial system into its state-controlled economy and get some good results; it can bite off small pieces of capitalism and enrich itself. But ultimately state capitalism is just a pale imitation of the real thing, where there’s neither the ability nor desire to fall back on totalitarianism when the going gets tough. Like that knockoff iPhone, China’s form of capitalism might look the part, but that’s where the similarities to the world’s still-largest and preeminent capitalist economy — our own — end.

This column is based on Bremmer’s remarks in the recent Intelligence Squared Debate: “China Does Capitalism Better Than America,” held in New York on Mar. 13.

35 comments

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Chinese capitalism is a unique and possibly dangerous form of capitalism because it is often backed by state coffers allowing it to buy almost anything it wants.
When; when west Africa is starving this fall, east Africa will be exporting enormous quantities of food to China because they bought it.
Neither capitalism or communism share a social consciousness.

Posted by Billibobbing | Report as abusive

Your article could be “tightened up” quite a bit, since most of what you say is not relevant to your question.

First of all, aside from failing to define capitalism (no it isn’t what everyone thinks it is) the US doesn’t practice capitalism as described by Adam Smith in his Wealth of Nations. In fact, the US practices the type of capitalism that Adam Smith specifically warned us about, a collusion of special interests that would ultimately destroy the free market system.

Second, you come closest to the real answer in this comment “The government uses capitalism only as a tool to reach its ends, not as a true expression of a free market”, but no cigar. For trade, the Chinese actually use mercantilism, which is (per Wikipedia) “the economic doctrine in which government control of foreign trade is of paramount importance for ensuring the prosperity and military security of the state.”

It is precisely because the US has been unable to understand what the Chinese have been doing for the past 30+ years, that we are deeply in debt to them. If you look at the US/Chinese trade relations, and compare them to mercantilism, you can quickly understand why we are in trouble and their economy is doing so well.

Posted by PseudoTurtle | Report as abusive

I thought Boloney spells Bologna, symbolizing the mumbo jumbo but delightly tasteful mish mesh in the famous Italian sausage!

Posted by Janeallen | Report as abusive

Impressive and original. I’ve read all your other books. When is this coming out?

Posted by jihobbyist | Report as abusive

I don’t think the Chinese decision makers will spend more than 5 seconds on Mr. Bremmer’s piece.

Typical ivory tower arguments, showing no trace of experience in making billions of dollars, or
managing trillions on a day to day basis.

For a starter, the only authentic Apple computers are manufactured in China. An unknowing student reading this
piece alone, without any other input of knowledge, would have thought authentic Apple computers are made in America. In fact, the late Steve Jobs was asked by Obama as to what it takes to bring the manufacturing jobs for Apple computers back to the United States, and Steve’s answer was “the manufacturing of Apple computers will never return to the United States” because the American manufacturers simply cannot deliver the efficiency, rapid response to new designs and various other competitive fearures for Apple computers. Note that cheap wages were not the determining factor.

Mr. Bremmer seems to mumble jumbo himself into multiple circular reasoning path. I love democracy; I wish the implications are not that democracy carries with it some inevitable inefficiency and bureaucracy, but unfortunately, it is true and is a price to pay. The truth is rarely can a cake be had, and eaten, both. For a few decades, it appeared that we have been able to do that; yet, the clear-minded ones, however few they numerate, saw the longterm problems with having the cake and eating it at the same time. It means that much of the wealth was on paper, in Bernie Madoff’s account, in deeds of real estate sold with inflated prices with subprime mortgages ,in inflated Greek bonds swapped with huge advantages on paper to help Greece fix the books to comply with EU rules, etc etc.

A Bloomberg Business magazine front page recently titled,
“China stop stealing our money”. I think the arguments there were not flawed but so constrained that it was obviously forced due to anger, frustration that our money is not what it appeared on paper for decades. The truth is that it was never there. Nobody stole it.

I loved David Letterman when he said, he didn’t really know economics, but all he knew was that China has all “our money”. Seems like Bloomberg and many American economists have deteriorated to the logic of comedians. I have absolutely no credible evidence, let alone proof that it is true, but it feels really good to scapegoat China, and that’s what will give me good rating and juicy sponsorship. So I’ll keep scapegoating and get rewarded by being able to hike the rates for advertising on my show! Well, it feels good for a while, then when reality hits, it will be worse than the sub-prime mortgages. Were the sub-prime mortgages initiated by China? No. Where did the bail out money comes from? Bonds bought by CHina and others. So China helped bail us out — not altruistically of course, they thought it’s a good investment, but what’s the interest rate of the bonds? Pretty shabby compared to the interest rates of the subprime mortgages charged by our banks that were “too big to fail”.

Therefore, to prey on human weaknesses( the love to scapegoat rather than admit fault) to equate those holding low interest American bonds, ie., GIVEN us money to bail us through the 2008 financial crisis, somehow “have all our money”. THAT’S EQUIVALENT TO LETTING LETTERMAN BE OUR FED CHAIRMAN. And frankly, with the politics the way we are heading for — no Republicans agreeing with any Democracts — except in scapegoating foreign countries — our country is heading for greater danger because nobody is interested in tackling real problems.

Everybody is still primarily interested in spinning, scapegoating, politicking, which intrinsically does not generate wealth for the country, only for the individual at the expense of the country as a whole.

Posted by CommonSensLogic | Report as abusive

Methinks the U.S. system is no more transparent than the Chinese’s.

Posted by w.burton | Report as abusive

We’re trying to reconcile the fairly offensive picture of the Three Stooges and the theme of the article. Any help?

CommonSensLogicNotSpelSoGud, you quoted one sentence from Jobs then made up the rest. He said we needed some 30,000 line managers to supervise the workers in the US and that, if Obama could figure out how to make that happen, the jobs could be here. And calling something mumble jumbo, whatever that is, then buttressing your point with a vague having and eating the cake analogy sounds like mumbo jumbo to us.

Great Letterman point though — that was clear as cake.

Posted by WeWereWallSt | Report as abusive

Thank you Ian. Finally someone is pointing out China’s capitalism is a sham.

For example, they use the GDP at the beginning of the year to determine their goals and then select industries that they will invest their money into. Like those “ghost cities” that no one can figure out. The apartment complexes that no one in Beijing can afford but are pushing out the ghettos that most Chinese are forced to live in. Experts say when they housing boom collapses, it will dwarf the one we had here.

I saw a report that said highly educated workers and their families make 1/4 the amount of money as a family living in poverty in the US.

They tried to copy the 707. That didn’t work. Does anyone remember how long it took for them to get that dumb thing off the ground? I keep thinking 10 years.

Anybody who argues that China has it better best thank God that our police officers don’t use our orphan children as target practice…yet.

Something the liberals didn’t plan for either is how deeply engrained the American spirit is in this country. Which is why we are not so easily seduced by socialist/communist utopian promises. Bummer.

Posted by CG507 | Report as abusive

Ya! America rocks! It’s so obvious. After reading this article I’m at full salute. I’m going to go outside and wave / swing a flag from my pole now.

Posted by Lord_Foxdrake | Report as abusive

Ian PhD is in political science. Since when politics is science? But I diverge.

The question is why Ian, not an economist, thinks he understand capitalism. I grant he may know a thing or two about American capitalism – triumph, destruction, distortion, corruption and what’s not. But I, and we, should challenge his proclaimed expertise on Chinese ‘capitalism’.

See, there is no such thing as Chinese capitalism. Ian wrote this piece, calling the Chinese economic success as ‘just another knockoff’, because American capitalism has crashed, stuck, and he is on the defensive.

Like all those elites of the great (perhaps even imperial) American political system and captains of capitalism, Ian simply cannot understand, accept, acknowledge how China can grow 10% compounded for a quarter century. While America not only crashed, but became pariah of the world as a result of Wall Street toxic financial exports, mass insecurity after the 9/11 blowback, failures of two military adventures, and national finances in a black hole.

Such shocks are impossible for the American minds to analyze, no matter how educated. So the likes of Ian wrote pieces to ‘explain’ how America is still great, because other country’s success must surely be fake or temporary.

Oh yes, ask any Chinese about their ‘capitalism’ and they will look at you like you’re the usual crazy American. What’s so simple and clear to the Chinese about how things work in China, require the most convoluted analysis by Ian Bremmer. His time would be better spent on figuring out how to fix America.

Posted by TomKi | Report as abusive

@commonsenselogik Rarely is the comment better than the article but your is.

Posted by Gillyp | Report as abusive

China has managed to combine the dark sides of two social systems: the desire to make money and grow economy at all costs of the capitalist, and the complete disregard of the sanctity of human life and liberty of the communist. It is in this system that places like Foxconn thrive (producer of pretty much everything electronic we use). A workplace so bad, they have to put nets up around the building to catch the workers made suicidal by working conditions worse than any prison in the U.S. And what has been done to make changes there? Nothing, and why should there be? Benefiting the workers does nothing to benefit the state, so it is illegal for them to unionize or protect themselves.

Many American captains of capitalism look at China and drool because companies there get away with murder (literally) and, because they generate revenue for the state, are not held responsible.

In my easily discardible opinion, American capitalism is the best economic system in the world, and the Chinese form of capitalism is exactly what the author described: a sham.

Posted by giddyuppy | Report as abusive

What is baloney is how all the “outsiders” want to wish for and hope for a U.S collapse. The Chinese economy is a fantasy, type “Ghost Cities” into Google and open your eyes. The 10% compounded for a quarter century is akin to the U.S. Government building 10,000 bridges to nowhere.

Posted by cjdelgross | Report as abusive

@CommonSensLogic, using the ‘sheeple’ argument and expecting others to agree with your opinion is truly laughable.

You yourself are a believer of propaganda. Steve Jobs announced that we did not produce Apple products in the U.S. because the Chinese have a better strategy? That’s laughable. They are exploiting people to get the most out of their money; they are violating human rights, and you are a supporter.

It is much cheaper to outsource manufacturing to the Chinese because they have sweatshops and force all of their employees to work longer than 40-hour weeks. If you would do some research online, especially in regards to Apple’s products being manufactured, you’d learn that the situation is a lot grimmer than you’d have imagined.

The reason Jobs was outsourcing manufacturing to China was simple; for profit. Everything is for profit and he would step on heads and disregard human rights to get more profit.

Posted by Vecinu | Report as abusive

Chinese problems are hidden until they pass the tipping point… people will realize the evil of communism and its economic irrationality… a nation without progress last 2000 years is growing last 30 years and we think it is impressive… bureaucracy lack of freedom will make china the hotbed of cheap labor and terrible lomein… china is a house of cards…

but we should break the liberal agenda which was created by communist democrats to turn our children into scared non risk taking government tity suckers… we need risk takers and innovators who believe in free enterprise and passion… liberals may shoot for $1000 medicare checks but we should not… poverty is not a virtue…

Posted by Ocala123456789 | Report as abusive

After reading just a small part of this article I’m glad I haven’t wasted any of my money & time on Ian Bremmer’s articles & publications. I’ve never heard of him before anyway. I am also loosing interest in Reuters. Maybe they are having a serious budget problem.

Posted by GMavros | Report as abusive

@PseudoTurtle;&
@CommonSensLogic

Reuters should immediately replace this Ian Bremmer’s mythical story with your posts and pay you well.
You should charge Mr.Ian Bremmer good money for your excellent lessons on China/US economics & politics.
I agree with you 100%, and as a EU & US citizen I have been doing business successfully in China for nine years.

Posted by GMavros | Report as abusive

I dont like this piece not because your judgement is incorrent, but because your snobbish tone.

Posted by yvonne__ | Report as abusive

@TomKiGood remarks.
During the 2008 WS collapse the average Chinese when asked what they thought about it, they simply replied with a smile…” You stupid Americans “. No argument there.

Posted by GMavros | Report as abusive

@GMavros, what other answer did you expect?

@PseudoTurtle &
@CommonSensLogic

Your comments where so well written I could not have said it better myself.

To Ian Bremmer. lets face it, you mix up some of your facts, like the piece you did about Iran and how Ahmadinejad wants to run for a third term. The man is barred from running a third term!
It really sounds like you are jealous that the Chinese are doing well and we are not. Oh I forgot, that CAPITALISM……..

Posted by KyleDexter | Report as abusive

The argument that somehow what is desirable for America’s capitalism is to be more Chinese of all places is absolutely preposterous. If anything, as Mr. Bremmer points out, we need to learn lessons from Canada, which arguably offers the far more successful version of capitalism, in which the financial sector is not suicidal and the state guarantees certain services with a certain set of standards; in which the regulatory and legal system are top-notch and almost impeccable.

Posted by Andrew93 | Report as abusive

What’s up with us and where we are? Let me define the basic political systems to get a better view from the perspective.

== Capitalism ==
Is a system in which if you make money you get to keep it, and if you lose money you just have to live with that, you have to live with the dept…for the rest of your life if necessary. That’s it, that’s capitalism.

== Socialism ==
Is a system in which if you make a lot of money it’s taxed away from you for the benefit of the society….and if you lose money the society is taxed to cover the loses. Sounds good in theory but for everybody who studied the history of the Soviet Union understands socialism doesn’t really work.

== Fascism ==
Now fascism (and this is according to Benito Mussolini who we all know he was an expert on the subject), fascism is a system in which if you make money you get to keep it and only if you lose money is society as a whole taxed to cover the loses.

And that’s exactly what we have in the European Union and in the USA right now. We’re not a capitalist society any longer. We have gone fascist. And oddly enough Lenin predicted that when american capitalism failed it would go fascistic to try to perpetuate itself a little bit longer. And he was absolutely right.

So we are currently in a fascist economic condition and the only ones who are trying to fight back and get us back to capitalism are considered socialists, fascists, anarchists, anti-capitalists and what not(even hippies) when by definition they are the only pro-capitalists and trying to get us back to the system the USA had invented a while in the past which made it the best country in the whole world.

So the real quetion is: WHAT ARE YOU GOING TO DO ABOUT IT?
Only by reading this the situation will not get fixed.

Posted by phorias | Report as abusive

What’s up with us and where we are? Let me define the basic political systems to get a better view from the perspective.

== Capitalism ==
Is a system in which if you make money you get to keep it, and if you lose money you just have to live with that, you have to live with the dept…for the rest of your life if necessary. That’s it, that’s capitalism.

== Socialism ==
Is a system in which if you make a lot of money it’s taxed away from you for the benefit of the society….and if you lose money the society is taxed to cover the loses. Sounds good in theory but for everybody who studied the history of the Soviet Union understands socialism doesn’t really work.

== Fascism ==
Now fascism (and this is according to Benito Mussolini who we all know he was an expert on the subject), fascism is a system in which if you make money you get to keep it and only if you lose money is society as a whole taxed to cover the loses.

And that’s exactly what we have in the European Union and in the USA right now. We’re not a capitalist society any longer. We have gone fascist. And oddly enough Lenin predicted that when american capitalism failed it would go fascistic to try to perpetuate itself a little bit longer. And he was absolutely right.

So we are currently in a fascist economic condition and the only ones who are trying to fight back and get us back to capitalism are considered socialists, fascists, anarchists, anti-capitalists and what not(even hippies) when by definition they are the only pro-capitalists and trying to get us back to the system the USA had invented a while in the past which made it the best country in the whole world.

So the real quetion is: WHAT ARE YOU GOING TO DO ABOUT IT?
Only by reading this the situation will not get fixed.

Posted by phorias | Report as abusive

As a Chinese I admit that some of the Phd said about China is true, but this should not be an excuse you American make to cover up your own mistakes.

Posted by tantantan | Report as abusive

This article gives too much credit to state capitalism. I want to quote ex-chinese leader:
“no matter white cat or black cat, the one catches mouse is a good cat”
“feeling stone while crossing river”

I think the current chinese leaders understands problems facing them, be it corruption, environmental, rich poor gap, etc. They are pragmatic, and have strong desire to do good for the nation.

Posted by IdeaSharing | Report as abusive

As with any country other than our own, China has some great things to teach us…..on the flip side, no economic expansion can continually prosper when a large portion of the economy is based upon theft & copycat products. The US is not perfect (in fact it’s far from it), but there’s a reason why so many are drawn to America and why so many of the world’s leading companies are based in the US. The US isn’t an angel by any means, but ripping off hard earned ideas through millions of daily cyber attacks isn’t a model that will continually prosper…..speaking of imperfect – when the hell will the US take cyber security seriously???

Posted by ProfMagyar | Report as abusive

That Intelligence Squared debate was pretty grim. I can’t believe any self-respecting American economist would suggest that China’s state-run system–with its complete disregard for the rule of law and willingness to torpedo successful sectors of the economy if the profit doesn’t all flow to the government–is superior to ours.

It’s always tempting to pay attention to Jeremiahs who claim our country is coming to the end of the line, but they can never muster a strong argument. The US may be heading for another big fall but we will certainly dust ourselves off and keep going. China, on the other hand, seems to be on the knife edge of social and political collapse all the time. All the shiny factories in the world won’t help them then.

Posted by jamesttt | Report as abusive

Accounting practices in china for example are a bit different. One case in point, a manufacturer producing widgets…produces a monthly amount of 1,000, moving them to its shipping department…that is a sale and entered as such. One asks, how? The widgets didn’t leave the factory, or factory floor. That’s the way accounting works in china. Many other ‘interesting’ anomalies occur, different than in America’s capitalistic system.

For example, setting up a business in china will have a partner from its government. Hiring follows ‘preferred’ candidates (qualified or not). and other anomalies.
Inherent inefficiencies,absent in American factores, are rife in chinese production facilities…and the list goes on.

No, “selective tariffs” is a very interesting idea for WTO and GATT. Energy (cheap and abundant) + manufacturing (cheap and abundant) in America, will lift every American to its rightful place of Excellence.

Posted by messup | Report as abusive

I believe the author disregards a simple fact: the Chinese don’t have capitalism, as they themselves have recently declared once again.

But my concern is not about them, my concern is about us, or what I call “back side” of our capitalism.
To illustrate my point, I first want to give kudos to CaptnCrunch for his efforts and optimism!
Now, let’s suppose CaptnCrunch is so good that he leads his company to become one of the major corporations, which is experiencing the most stiff competition now. What balance of “have fun” and “make money” will he have in his motto now? And God bless him – if his employees still “come to work… glad to be here”… and not in China, or India, or elsewhere.

As an American, I am concerned not about China and whatever system they believe they’re developing with help of our capitalism; to me, it is about what country are we becoming at the times when our American – true – capitalism is constantly showing us its “back side”?

Posted by UauS | Report as abusive

I believe the author disregards a simple fact: the Chinese don’t have capitalism, as they themselves have recently declared once again.

But my concern is not about them, my concern is about us, or what I call “back side” of our capitalism.
To illustrate my point, I first want to give kudos to CaptnCrunch for his efforts and optimism!
Now, let’s suppose CaptnCrunch is so good that he leads his company to become one of the major corporations, which is experiencing the most stiff competition now. What balance of “have fun” and “make money” will he have in his motto now? And God bless him – if his employees still “come to work… glad to be here”… and not in China, or India, or elsewhere.

As an American, I am concerned not about China and whatever system they believe they’re developing with help of our capitalism; to me, it is about what country are we becoming at the times when our American – true – capitalism is constantly showing us its “back side”?

Posted by UauS | Report as abusive

It’s not capitalism. It’s mercantilism like the British in the 1700′s.

Posted by neahkahnie | Report as abusive

What bozo thinks there’s any way to compare US and Chinese capitalism? Dump all kinds of arbitrary liberalism on the Chinese and see how well they deal under load. They need a bunch of idiotic rules from the EPA, affirmative action, unions, etc. Not to mention if China had to deal with hippies blocking bulldozers and such they would simply beat them senseless and get on with business.

Posted by BoJiden | Report as abusive

We have a “true free market system”? This is rich.

Posted by HenryJin | Report as abusive

One may smirk and snide at China for copying everything foreign but I remind people that all innovative ideas are hatched from learning from the past. In other words, copying is a necessary stepping stone to innovation.

Almost everyday high tech companies are suing each other for patent infringements, that is, accusations of copying each others products.

The US used to decry Japan for its copying culture back in the 60s and 70s, but since the 2000s the US patent office has declared that Japan, a country w/ half the US population, holds twice the number of active worldwide patents than the US. (Active patents are patents sold to companies to be used in their product). Nowadays, the US expects the next human-like robotic waiter to come from Japan, not America.

Likewise in China. The country’s leadership in a 2011 manifesto has called upon home-brewed innovation and creativity. Let us not forget that China has annually graduated 600k engineers while the US only 70K, and almost half of that in the US were granted to foreign students. In lieu of that a bright high tech future for the US is less certain. Already this year, China built its first supercomputer this year, edging out even Japan.

Posted by freeqwerqwer | Report as abusive

China’s robust economy grew every year in the last 30 yrs while the US economy during that time had only minimally grown. It will continue unabated for sometime yet.

Critics have derided the Chinese centrally-planned market economy as shaky and frail, fingering its dependency on foreign investments, State quota growth requirement, political corruption, and parking chinese surplus money in US bonds. All of this negative talk hints that someday China might fall down like a house of cards.

But I’m afraid the joke is on the US, not China.

The US is a prisoner of the Godzilla size burden called “Entitlements” (ie., social security, medicare, medical, etc). China has none of that burden.

In the US, the government financially takes care of its old people but not in China. That job belongs to each individual family. That is why Chinese families save and save and save and why US families consume and consume and consume. (By the way, this is true all over Asia)

The bulk of the US government budget is on dead spending like entitlements and the military, while China’s govt can spend entirely on construction, ie., on infrastructure, transportation, and other projects that are truly a boon to the country’s growth.

In the 1950s, the US was an industrial power with no equals. Its budget was like 20% entitlements, 10% military and the 70% growth. But today, it’s the reverse. In 2012 it is 80% entitlement, 10% military and 10% for growth. China’s budget looks more like the US’s budget of the 1950s, and that is why it is growing mightily up.

Posted by freeqwerqwer | Report as abusive